Plan calls for UNM employees to pay more for benefits

ALBUQUERQUE, N.M. — University of New Mexico employees would contribute to a new trust fund and pay more in premiums under a plan to tackle the school’s multimillion-dollar retiree health benefits problem.

A task force recommended those steps to help cover the cost of retiree health benefits, which is projected to soar to $162 million in 30 years. The task force, composed of faculty and staff, was formed in December after an audit found the program was unsustainable.

A regents’ committee last week approved the recommendations, but only as a temporary fix. The task force was asked to make more recommendations that would be applied next year.

The proposal as it stands is scheduled to go before the full board of regents today for final approval.


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In total, the task force’s recommendations would cut UNM’s unfunded liability by $85 million, or 52 percent.

UNM currently pays 53 percent of premiums for 2,500 retirees, and another 1,000 employees are eligible to receive the benefits. About 6,500 are in the pipeline.

Under one change, current employees who want to receive retiree health care benefits would be required to pay into the tax-exempt trust fund, called the Voluntary Employee Benefit Association.

Starting July 1, UNM employees would contribute half of 1 percent of their salary in the first year, while the university would contribute the same amount. By the third year, employees and UNM each would contribute 1 percent.

Employees also would see increases in the premiums they pay. Starting July 1, retirees over 65 would pay 60 percent of their premiums, while the university would pay the other 40 percent. Currently, UNM pays 53 percent while employees pay 47 percent.

The program also covers retirees who are under 65 years old and don’t qualify for Medicare, which the audit found drives up the school’s cost.

The amount paid by those under 65 would be based on their salary, but would increase over time. For example, premiums for those retirees who made more than $35,000 annually would increase to 50 percent the first year. By fiscal year 2016, they would pay 60 percent of premiums, while UNM covered 40 percent.

Staff Council president Mary Clark said she was very concerned about the increases in premium costs. She said many of the employees who retire before 65 are staff who had physically demanding jobs.

Faculty Senate president Amy Neel also said she was concerned, especially in light of the increased contributions employees must make to the Educational Retirement Board pension fund, which also faced insolvency. UNM employees will have to up their contributions to that fund from 9.4 percent to 10.1 percent this year. That will grow again next year to 10.7 percent.

Regents Jamie Koch and Gene Gallegos, who sit on the finance committee, were not satisfied with the new recommendations.

“Many of our peer institutions pay zero for these health benefits, and UNM has been extraordinary,” Gallegos said. Gallegos suggested once again redesigning the plan and increasing deductibles.

But the time to do that is running out, said Mike Duran, Human Resources chief operating officer. He said the school would have to renegotiate with its providers, a process that could take months.
— This article appeared on page A1 of the Albuquerque Journal


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